With all the hysteria surrounding “The Decision†that was LeBron James’ choice to leave Cleveland for the sandy beaches of South Florida, there are still multiple perspectives we could analyze as to why he opted out of of Cleveland.
Many of you may already be aware of the obvious reasons but there’s one interesting bullet point that may showcase LeBron’s true business acumen.
There was a solid selection of teams out there bidding for the “chosen one’s†abilities and talent, not to mention the economic boost he would bring to any city that he went to play for. There was the Chicago Bulls, still reveling in the ghost of Michael Jordan, arguably the greatest player ever to play the game. However, the Bulls are currently an organization that has great talent and a positive upside with key players in place to potentially make a championship run if James was persuaded to move in that direction.
There was the New York Knicks, which had been looking for a savior since the great Patrick Ewing retired, and that was notably the first team to really state their claim and desire to have James recapture the culture, feeling, and energy of Madison Square Garden, better known as the Mecca of basketball.
There was the strong pull of the ole’ faithful Cleveland Cavaliers, who demanded loyalty and who was promised by James to bring a championship to Cleveland.
Finally, there was the Miami Heat, which had the strongest selling points. James would have the opportunity to play with his former Olympic Gold medal teammates Chris Bosh, formerly of the Toronto Raptors, and Dwayne Wade, current Heat superstar. This in itself increases the King’s chances to obtain that ever-elusive championship ring that all strive for but so few acquire.
To do it, James would reportedly take a severe pay cut, but I’m pretty sure that to the average person, a possible $99 million over six or seven years versus staying with Cleveland where he could’ve earned an estimated $128 million over the same amount of time is nothing to sneeze at.
Here’s what some may fail to realize: There are some added benefits to playing in the warm confines of South Florida. Florida has no state income tax. Zip, Zero, Nada.
That automatically factors into the King’s contract, depending on where he decides to live. If you remember ESPN reporter Jim Gray asking James if he would continue to live in Cleveland, his answer was, “I don’t know.â€
This may be a stretch, but is it really? This argument in no way disavows James’ quest for a championship ring but, as with any decision that any potential employee of a business makes, a good rule to follow is weigh ALL your options. This is something James and his much ridiculed P.R. company and inner circle has clearly done. All hail the king’s savvy.
Here’s a comparison of state income tax for Chicago, Cleveland, New York, and Miami:
Note: This is all assuming James is given the same contract he reportedly expected to earn in Miami.
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CHICAGO, IL
Personal Income Taxes
Tax Rate Range: flat rate of 3% of federal adjusted gross income
Personal Exemptions: single-$2,000; married-$4,000; dependents-$2,000
Standard Deduction: none
Medical/Dental Deduction: health insurance and long-term care insurance premiums are deductible
Federal Income Tax Deduction: none
Retirement Income Taxes: Illinois does not tax distributions received from qualified employee benefit plans, including 401(k) plans; an Individual Retirement Account, (IRA) or a self-employee retirement plan; a traditional IRA that has been converted to a Roth IRA; the redemption of U.S. retirement bonds; state and local government deferred compensation plans; a government retirement or government disability plan, including military plans; railroad retirement income; retirement payments to retired partners; a lump sum distribution of appreciated employer securities; and the federally taxed portion of Social Security benefits.
CLEVELAND, OH
Personal Income Taxes
Tax Rate Range: low-0.587%; high-5.925%
Income Brackets: lowest-$5,000; highest-$200,000; several cities in Ohio levy municipal income taxes
Number of Brackets:
Personal Exemptions: * single-$1,500; married-$3,000; dependents-$1,500
Standard Deduction: none
Medical/Dental Deduction: unreimbursed medical/dental expenses, premiums for long-term care insurance, and unsubsidized health insurance premiums are deductible
Federal Income Tax Deduction: none
NEW YORK CITY
Personal Income Taxes
Tax Rate Range: low-4.0%; high-8.97%. The state has enacted two new temporary income tax rates in its 2010 budget levied on the highest-income filers. For households with taxable income above $500,000, regardless of filing status, the tax rate rises to 8.97 % from 6.85%; for those with taxable income below $500,000 but above $200,000 for single individuals, $250,000 for heads of households, and $300,000 for married couples filing joint returns, the rate increases to 7.85% from 6.85%.
Income Brackets: *lowest-$8,000; highest-$500,000
Number of Brackets: 5
Personal Exemptions: single-$0; married-$0; dependents-$1,000
Standard Deduction: single-$7,500; married filing jointly-$15,000
Medical/Dental Deduction: federal amount
Federal Income Tax Deduction: none
MIAMI, FL
Personal Income Taxes
No state income tax. ZERO.